Health Care Financing Reform in China

1

• Health Care Financing Reform in China
• Teh-wei Hu, PhD.
• Professor of Health Economics
• University of California, Berkeley

2
Health Care Financing Reform in China

• Introduction
• Urban Health Financing Reform
• Rural Health Financing Reform
• Conclusions
• Future Challenges

3
Socio-Economic Background
Source www.stats.gov.cn
4
National Health Expenditure
Source Zhao Yuxin, China National Health
Expenditure Report in 2000
5
Health Service Utilization in 1998

Source National Health Survey Report in 1998,
MOH, P.R.China, 1998 .
6
Reasons for not seeking outpatient care

• Source National Health Survey Report in 1998,
  MOH, P.R.China, 1998

7
Reasons for asking for discharge

• Source National Health Survey Report in 1998,
  MOH, P.R.China, 1998

8
Uninsured Population

• Source Dr. Rao Keqin, Transitional Economy
  and Health Reform (presentation) to Hospitals
  and Development under Market Principles in China
  (Dalian, Feb., 2003)

9
Urban Health Financing Reform in 1994

• Combine GIS and LIS into single system
• Individual Medical Savings Account (MSA)
• Pilot in two counties
• Zhenjiang, Jiangsu Province
• Jiujiang, Jiangxi Province

10
MSA Pilot Financing Scheme
Source www.molss.gov.cn Comments on Urban
Medical Insurance reform Piloting
11
MSA Pilot Payment Scheme

• MSA used for both outpatient and inpatient
  expenditure
• Deductible before drawing the social pooling
  fund 5 of individual annual income
• Co-payment scheme under social pooling fund
• lt RMB 5,000 10
• RMB 5,000-10,000 8
• gt RMB 10,000 2

Source www.molss.gov.cn Comments on Urban
Medical Insurance reform Piloting
12
Medical Insurance Reform in 1998

• Institutional reform jurisdiction transferred
  from MOH to MOLSS
• Implement New MSA countrywide
• MSA used for outpatient expenditure
• Social pooling fund for hospitalization
• Payment ceiling 4 times annual income

Source www.molss.gov.cn Decision on Urban
Medical Insurance reform in 1998
13
Medical Insurance Reform in 1998
Source www.molss.gov.cn Decision on Urban
Medical Insurance reform in 1998
14
Issues of the New MSA

• Delay doctor visit to save money
• Hospitalization substitutes outpatient visits
• Large accumulation of social pooling fund
• In 2003, revenue of RMB 86.5 billion and expenses
  of 63.6 billion.
• Second round reimbursement

15
Urban Medical Insurance Coverage
Source Presentation made by Vice Minister of
MOLSS, Dongjin Wang at China medical insurance
conference on Feb 17, 2004
16
Urban Health Financing Reform

• Drug formulary in 2000
• A category drug National level
• B category drug Provincial level
• Up to 15 adjusted
• Initiate provider cost control
• Case payment
• Global budget

Source www.molss.gov.cn
17
Rural Health Insurance Coverage

• a For villages covered by CMS. Source Li,
  Weiping, Zhang, Licheng, Zhu, Peihui, Options
  for Rural Health Security in Chinas New Policy
  EnvironmentSynthesis Report 2002
• b Source World Bank 1984
• c Source National Health Survey Report in
  1998, MOH, P.R.China, 1998

18
Community-Based Organized Financing Experiments
in Rural areas

• Sichuan Rural Health Insurance Experiment (1989)
• IHPP and UNICEF The Study of Thirty Poor
  Counties (1992)
• IHPP and IDRC Finance of Health Service in Poor
  Rural China (1993)
• WB Funded Health IV Project (1993)
• WHO Fourteen County Study of Community Financing
  (1994)
• IHPP and UNICEF Chinese Rural Health System
  Research (1996)
• WB Funded Health VIII Project (1997) 

19
Issues under CMS experiments

• Not enough financing
•   Limited financing ability of households
•   Limited subsidy from local government
•   The impact of fee-to-tax conversion reform
• Adverse selection in enrollment in the scheme
• Unattractive benefit package
• Poor quality of health service delivery system
• Failure to control cost under fee-for-service
  plan
• Lack of farmers trust in fund management

20
New Cooperative Medical System (NCMS)

• Implemented by MOH (Ministry of Health)
• Multiple source financing 10 Yuan from Central
  Government, 10 Yuan From Local Government and 10
  Yuan From Households
• Mainly cover catastrophic disease
• Voluntary participation
• Piloting in each province
• It is expected to enroll all the rural people by
  2010.
• Fund pooled and managed at county level

Source www.moh.gov.cn Decision on Enforcing the
Rural Health Care in 2002
21
Medical Financial Assistance System (MFA)

• Implemented by Ministry of Civil Affairs
• Targeted groups low income families
• Fund sources local government, central
  government and social donations.
• Combined when NCMS is available.
• 2-3 demonstration counties each province
• Fully established by 2005.

Source Suggestions on the Implementation of
Medical Assistance in Rural China in 2003
22
Conclusion (I) Urban Reform

• Urban Health Financing Reform
• Expand risk pooling to expand coverage into urban
  area and employee dependents
• From demand side cost control to provider side
  cost control

23
Conclusion (II) Rural Reform

• Rural Health Financing Reform
• Past experiments have found numerous challenges.
• Central government has taken leadership and
  provided subsides to establish NCMS
• Supplement with low income medical insurance

24
Future Challenges

• China still has a large uninsured population (58
  in urban and 90 in rural)
• Need to develop a systematic and integrate health
  care financing system
• Reimbursement still uses fee for service